Today, the benchmark iron ore futures contract I2605 on the Dalian Commodity Exchange (DCE) exhibited a ‘rally and retreat’ pattern. After facing downward pressure in the afternoon session, the contract ultimately closed at 821 RMB/tonne, marking a marginal increase of 0.06% from the previous trading day. In the physical market, prices remained largely stable with minimal fluctuation. Traders displayed average enthusiasm for quoting, predominantly adopting a ‘follow-the-market’ strategy, while steel mills maintained a cautious procurement rhythm, focusing strictly on rigid demand restocking. Consequently, the overall trading atmosphere appeared somewhat subdued. From a fundamental perspective, the pace of resumption for previously idled blast furnaces fell short of expectations. Compounded by the initiation of annual maintenance programmes by certain steel mills, SMM statistics for this week record the Blast Furnace Operating Rate at 85.73%, a week-on-week decline of 0.26%. Accordingly, daily average hot metal output retreated to 2.3583 million tonnes, a decrease of 3,200 tonnes compared to the previous period. Despite the short-term pressure evident in the hot metal data, the broader trend towards production resumption remains unaltered, ensuring the persistence of rigid iron ore demand. When combined with the gradual materialisation of pre-Lunar New Year restocking logic and positive capital sentiment, support at lower price levels remains robust. However, the continued thin liquidity in spot transactions and the supply pressure arising from inventory accumulation are currently capping the potential for price upside. Taking all factors into account, iron ore prices are projected to maintain a pattern of fluctuation at elevated levels in the short term.

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Source: Metals Market Index (MMI)